Patients still use cash, especially for co-pays. You'll need effective policies and procedures to minimize the risk that cash presents.

Yes, patients still use cash, especially for co-pays. And, cash presents a risk to the practice.

How does your practice handle cash? What are your procedures? Have you documented the process so that employees who step in to cover for the regular cash handler know what the responsibilities are?

The biggest risk cash poses is embezzlement. All those $20 bills can be very tempting, especially in hard economic times.

So the very first thing you want to be sure of is that your employees are trustworthy.

Run a background check on all new hires. If you ask your colleagues about background checks, they'll have plenty of stories about the candidate who wasn't forthcoming on the application or skirted questions in the interview and then walked away with a quarter of a million dollars one $20 bill at a time.

You'll also want to be sure all your employees are bonded -- so if cash does disappear, you'll be able to recoup it.

Once you're sure the personnel area is covered, turn to the processes and procedures:

Number all encounter forms (or visit fee slips) and track missing encounter forms on a daily basis. Most practice management systems provide a report of missing encounter slips or appointments that have not had charges posted against the appointment.

Audit tools are built into these systems because they have been found to be efficient means to monitoring the charge and payment posting processes. Use them.

Insist that your staff use the computer to generate receipts for patients who pay at the time of service. The practice management system payment reporting tool provides an excellent red flag by identifying reversed payment transactions. Remember, posting a payment when it's received is more efficient -- your staff does not have to subsequently post the payment and reconcile that to a paper receipt journal.

Do not mix patient payments with petty cash. There should be two separate drawers for these very different types of cash. It is only fair to the cashier accepting payments that they are held accountable for what they can control. It will muddy the waters if a supervisor, or manager, or physician reaches into the cashier's drawer to pull some cash out to accommodate a last-minute lunch order or to send an employee out to buy office supplies.

Separate the refund process from the payment posting process. A responsible staff member who does not post payments should be delegated to review all refund check requests with a complete audit trail of the overpayment transactions that created the refund. No one who has payment posting responsibilities should have the authority to issue a refund check request.

Physician signature control on the refund checks is insufficient check-and-balance as it is unreasonable to expect the signing physician to meticulously review the account history that generated the refund.

A separate refund authority before the check-signing step will ensure that only appropriate refunds are issued and that they're issued to the to patients who are supposed to get them.

Change passwords. Staff who are responsible for posting charges, payments, adjustments and/or refunds should change their passwords every quarter. In many practices, it is not uncommon to share passwords when there is an urgent need or a problem.

Forcing the staff to change their passwords routinely eliminates the opportunity for a misuse of the shared passwords over time.

Implement a daily reconciliation process. The process will balance the money collected with the amount posted to the practice management system and the amount deposited into the bank. The reconciliation should be performed by a team leader or supervisor who does not have responsibility to post payments or make deposits for a clear distinction of job duties.

How can solo physicians incorporate such checks and balances into their businesses?

If the practice has only one clinical support person and one administrative support person, the physician must play an administrative role.

Full use of the practice management system (automated reconciliation of numbered encounter slips, computer-generated payment receipts) will allow the physician to more easily review the work on a daily or weekly basis.

The physician must take off the stethoscope and put on the accountant visor to prove the daily reconciliation and the audit trail for refund check requests. A cursory once-over and quick signature is not enough.

If the physician cannot fit this responsibility into the day, it is money well spent to outsource a routine audit to an accountant or practice management consultant and establish sound business practices.

The market forces are driving more payment responsibility to the patient, and that can translate into more cash in your practice.